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02/12
TNK-BP (Russia)
In July 2008, BP was embroiled in a dispute with the Russian shareholders of its TNK-BP joint venture. The Russian shareholders, a group led by billionaires Mikhail Fridman, Viktor Vekselberg, and Len Blavatnik, were demanding the removal of TNK-BP Chief Executive Robert Dudley. The Russian shareholders maintained that BP was not adequately controlling costs, and was blocking efforts to expand TNK-BP outside of Russia because that would compete with BPs own operations. They also claimed that BP was employing too many highly paid expatriates in Russia. BPs response was that the ventures main area of operation was always meant to be Russia and Ukraine. According to Dudley:
The companys corporate governance is being tested and the fate of the company is a bellwether for Russias progress in improving the way its companies are runFor five years, one of my roles has been trying to balance all the issues of shareholders. And I think the ability to keep this balance is important, and I will try to keep that balance.1
In comments made to the French newspaper, Le Monde, Russian Prime Minister Vladimir Putin said that he had warned both sides that the 50-50 structure would be problematic: You shouldnt do thisWork it out between yourselves so someone has a controlling stakeThere needs to be a bossYou see the result: Theres always friction over whos in charge.2 With events escalating, Robert Dudley and BP senior management were faced with a challenging situation. Losing its stake in TNK-BP would have serious nancial implications for BP. TNK-BP accounted for nearly onequarter of BPs oil production, and close to one-fth of its reserves. How the situation was resolved would have a lasting impact on BP and its presence in Russia. The resolution would also impact Russias overall reputation for attracting and supporting foreign investment.
BP
BP, formerly British Petroleum, was the worlds third largest oil and gas supermajor. Originally founded as the Anglo-Persian Oil Company, BP went from a public company to a British state-owned entity, and then back to being publicly traded during the Thatcher years. BP made many acquisitions over the past century, including Standard Oil of Ohio, Amoco, Castrol, Aral, and Arco. BPs upstream business operated in various countries, including the United States, the United Kingdom, Australia, Angola, Azerbaijan, Canada, Egypt, Russia, Trinidad, Tobago, and Indonesia. The company also operated a diverse range of pipeline, rening, chemical, and retail assets around the world. In recent years, the company had adopted the tagline Beyond Petroleum as way to distinguish itself from its hydrocarbon-based competitors. Like its supermajor competitors, BPs biggest challenges were increasing oil and gas production and replacing reserves. Most host governments in oil-producing nations were looking for better contractual terms, and the so-called easy oil and gas discoveries were already made. Reserve replacement and equity ownership of new
Copyright 2009 Thunderbird School of Global Management. All rights reserved. This case was prepared by Professors Andrew Inkpen and Michael Moffett for the purpose of classroom discussion only, and not to indicate either effective or ineffective management.
discoveries was becoming difcult. In 2003, then-CEO John Browne told analysts that BPs daily oil production would rise 1.0 million barrels to 4.5 million barrels per day by the end of 2007. The result was less than half the projection, and targets were scaled back to 4.3 million barrels per day by 2012. In 2008, the company planned to invest $15 billion in its upstream business. Relative to its competitors, BPs production growth was constrained by its mature oil elds. Thus, BP was aggressively looking for new reserves, and the stake in TNKBP was a major part of expected production growth. BPs nancial performance in many areas was lagging behind that of ExxonMobil and Shell, especially in the rening sector, which was planning 2,000 job cuts in 2008. The company was also planning about 2,500 head-ofce job cuts to eliminate bureaucracy and restructure the organization around global businesses rather than geographic sectors. In addition, BPs safety record was under close scrutiny after a recent series of incidents, the most serious of which was the 2005 explosion at Texas City that killed 15 people.
Alfa Access/Renova
In December 1998, Chernogorneft was driven into bankruptcy by Tyumen Oil Company (TNK), a company held 50-50 by a group known as Alfa Access/Renova or AAR. TNK was created in 1997 from a cluster of 600 upstream and downstream companies in Russia and Ukraine acquired through various privatization auctions. AAR was a complex alliance involving three private investment companies: Russia-based Alfa Group and Renova Group, and New York-based Access Industries. Each of the investment companies was headed by an oligarch: Mikhail Maratovich Fridman, president of Alfa Group Consortium, was born in 1964 in Lvov, on the western border of Ukraine. Fridman attended Moscow Institute of Steel and Alloys, where he had his rst business ventures, including window washing, running a discotheque, and scalping Moscow theater ticketsall illegal under Soviet rule. In 1988, Fridman set up a photo cooperative, Alfa Foto, and subsequently ALFA/EKO, a commodities trading rm, which gave him the capital to establish Alfa Bank in 1991, one of Russias largest banks. He hired a Russian foreign trade minister to head up the bank. As his wealth grew, Fridman was able to acquire signicant oil interests in Russia. He was a member of a group that funded President Boris Yeltsins 1996 re-election campaign. Alfa Group, one of Russias largest privately owned nancial-industrial groups, controlled Alfa Bank, Alfa Capital, several construction material rms (cement, timber, glass), food processing businesses, and a supermarket chain. In 2008, Forbes listed Fridmans wealth as $20.8 billion, 20th richest person in the world. Viktor Vekselberg was born in 1957 in the Ukraine. He graduated from Moscow Institute of Transportation Engineering, and later went on to complete his Masters Degree and Ph.D. in mathematics. Vekselberg worked at the special design ofce of state-owned Rodless Pumps (OKB BN). He started as a technician, and eventually became research manager. Vekselberg joined the world of business in 1990. In 1993, he became Chairman of the Board of Directors of Renova Group, which became one of Russias largest investment and business development companies. Through Renova, Vekselberg orchestrated Russias rst successful hostile takeover, acquiring the Vladimir Tractor Factory in 1994. He rose to prominence after Boris Yeltsins re-election in 1996, when he started to purchase shares of oil companies, including Tyumen Oil (TNK). In 1997, he became a member of the board of directors of TNK. Vekselberg was ranked the 67th richest person in the world by Forbes magazine, with a net worth of $11.2 billion.
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Len Blavatnik was born in Russia in 1958. After attending Moscow Institute of Transportation Engineering, he emigrated with his family to the U.S. in 1978. He received a Masters Degree in computer science from Columbia University and an MBA degree from Harvard Business School in 1989. In 1986, Blavatnik founded Access Industries, a privately held U.S.-based industrial group. After the fall of the Soviet Union, Access began making investments in Russia in industries such as oil, coal, aluminum, petrochemicals and plastics, telecommunications, media, and real estate. With his friend from university, Viktor Vekselberg, Access and Renova collaborated in various investments. Blavatnik was ranked the 113th richest person in the world by Forbes magazine with a net worth of $8.0 billion.
Simon Kukes, chairman of TNK, said that his company had upheld international standards of corporate governance and ethical behaviour, and stressed that the purchase had been made in a competitive auction.5 He offered BP the chance to enter a strategic alliance with him. Although TNK denied doing anything illegal, it appeared to most outside observers that the company used its political inuence and the weaknesses of Russias laws and judicial system to ensure that a succession of court cases went its way.
BP and TNK
In December 1999, TNK and BP announced an agreement under which Sidanco would regain Chernogorneft in return for TNK receiving a 25 percent stake in Sidanco. AAR, TNKs principal shareholder, would receive 25 percent plus one share in Sidanco. In exchange, TNKs shareholders would return Chernogorneft debt-free. The deal would cost TNK about $200 million, compared with $484 million paid by BP for its 10 percent stake. In 2000, after lengthy negotiations, AARs controlling shareholders replaced Unexim Group as the dominant shareholders of Sidanco. In February 2003, BP announced a major strategic alliance with the same companies with which it had battled for control of Sidanco. Under the terms of the alliance, BP and AAR would combine their interests in Russia to create the countrys third largest oil and gas business, in which both parties would each have a 50 percent stake. The new company, TNK-BP, would be made up of various assets: TNK, Sidanco, and most of BPs Russian assets. BPs Russian assets included a retail network in the Moscow region, minority stakes in Sidanco Rusia Petroleum, and several other equity investments. For its 50 percent stake, BP would pay AAR $3 billion in cash and three subsequent annual payments of $1.25 billion in BP shares. In describing the deal, BP CEO John Browne said that BP had instituted new governance mechanisms to protect the interests of all parties. He also said that changes in Russias legal system and an increasing commitment to international rules of trade convinced BP that it was time to deepen its partnership with AAR. Browne called the experience with Chernogorneft and Sidanco a key learning experience in Russia. A BP executive said, Of course, we had qualms, given the history. But sometimes you dont get the chance to choose your partners. It was the only deal available.6 When the JV was announced (see Exhibit 1), there was speculation that the Russian government had reservations about the desirability of foreign investment in energy reserves. There was also speculation that the speed with which the deal was done caught the government off guard.
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BP
TNK-BP Ltd.
100% TNK Industrial Holdings Ltd. 100% Slavneft 100% TNK-BP Ukraine c. 50% 78% Listerine. Ukraine 75% STBP Holdings, Ltd
63%
RUSIA Petroleum
TNK-BP Holding
Production
Refining
Marketing
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Key elements of the joint venture agreement were as follows: Ten-member board with equal representation from BP and AAR. AAR nominates the Chairman of the Board and the Chairman of the Remuneration Committee. BP nominates the Vice Chairman of the Board and Chairman of the Audience Committee. BP appoints the CEO and holds half the top management positions. The Russian shareholders have management control over government relations, legal affairs, and security. Dividends will be a minimum of 40 percent of TNK-BPs U.S. GAAP net income. The debt ratio must be kept at 25 percent to 35 percent. The business scope of TNK-BP is limited to oil and gas in Russia and Ukraine. Management is particularly focused on certain actions: to improve safety, focusing on reducing high-risk practices; to improve planning and forecasting, so that delivery can be assured and there are no surprises; to improve internal control systems and ethical conducts; to curb the chances of fraud, illegal payments, and misjudgments; to improve the reporting of results, continuously diligent and appropriate disclosure; and, nally, to increase export and production, and reduce cost through the use of better technology. TNK-BP holds a 49.8 percent interest in Slavneft through TNK-BP International Ltd. Slavneft operates as a separate entity. TNK-BP and Gazprom Neft have equal representation on the Slavneft Board of Directors. The partners are not allowed to sell their interests in the venture until after December 31, 2007 (termed the lock-in period).
BP appointed Robert Dudley as CEO. Dudley, an American and graduate of Thunderbird School of Global Management, was a veteran Amoco and BP executive. In the mid-1990s, Dudley worked for Amoco in Russia, and saw Amoco outmaneuvered on a deal by the Russian company Yukos.
At the same meeting, Mikhail Fridman (the lead oligarch shareholder) said:
Of course, we made quite significant profits from the deal but, frankly speaking, weve done this deal not because we just want to realize the profits, but because we do believe that the most important way for us as investors to increase our benefits and potential growth, we do believe that to create a joint venture with a company like BP at the end of the day, well benefit after all. It is obvious to everybody here that the biggest challenge we have is probably the cultural gap between the Russian style of doing business and Western style of doing business. And it is not so easy to overcome that. And from this point of view, we are quite happy that we have a long story of relationship between us and BP. And this not [sic]very smooth storynot just, you know, [sic]story of friendship and partnership that started from quite tough, you know, competitionWe do believe that there are only two things we need as a shareholder. I think its trust and, second, probably patience. 6 TB0009
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And it seems to me that both sides have enough of that. So, thats why Im quite optimistic about the future of our company.
TNK-BP Assets
In 2008, TNK-BP was Russias third largest oil and gas company in terms of liquids production, and accounted for almost 20 percent of Russias total oil production. TNK-BP employed about 65,000 people, including 85 foreign managers, many of whom had formerly worked for BP. The main oil production assets of TNK-BP were located in West Siberia and the Volga-Urals region (Exhibit 3), with new provinces being opened in East Siberia via the planned development of the Verkhnechonskoye oil eld (concurrently with the construction of the Transneft-operated East Siberia Oil Pipeline) and in the south of the Tyumen region. The main gas business assets included the Rospan project in Novy Urengoi, which is 100 percent owned by TNK-BP, and the Yugragazpererabotka gas processing joint venture with SIBUR Holding in Nizhnevartovsk. TNK-BP owned 49 percent of Yugragazpererabotka. Some specic data on TNK-BP assets are as follows: TNK-BP held approximately 200 exploration and production licenses. Twenty-seven new licenses were acquired in 2007. TNK-BPs top 10 fields delivered two-thirds of its production. Top 20 fields held 80 percent of proved reserves. Average well productivity was 15 tons per day. Approximately 25,000 km of infield gathering pipelines (following divestment of assets). TNK-BP had four refineries located in Russia (Ryazan Refinery, Saratov Refinery, Nizhnevartovsk Oil Rening Enterprize, and Krasnoleninsk Renery) and one renery in Ukraine (Lisichansknefteorgsintez), all close to production areas and export routes. The company operated approximately 1,600 retail outlets branded either as BP or TNK in Russia and Ukraine. Exhibit 3. TNK-BPs Asset Map, 2008
Source: BP.
JV Financial Results
TNK-BPs revenues, protability, assets, and cash ow had grown substantially over its brief life span (Exhibit 4; also see the various Appendices). However, the revenue structure was heavily constrained by export duties (the Russian government captured about 90 percent of crude prices), and the domestic market prices earned were complex combinations of contracts and regulated rates.
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EBITDA/Revenue
100%
Total Revenue
$32,000 80%
$28,000
$4,000
Net Income
0% 2002 2003 2004 2005 2006 2007
$0
Revenues grew from $9.2 billion in 2002 to $35 billion in 2007. Net income rose from $1.5 billion in 2002 (16.8 percent) to $5.7 billion in 2007 (16.1 percent). Total assets had doubled between 2002 and 2007, from $12.6 billion in 2002 to $25.3 billion. The net debt/equity ratio (debt cash / equity) decreased from 30.2 percent to almost zero in 2007 (0.1 percent). As a result, TNK-BP earned more in interest income than it paid in interest expense in 2007. Operating cash flow grew from $1.385 billion in 2002 to $5.053 billion in 2007. The growth in cash flow was deployed between both the owners and the business. Capital expenditures (capex) rose from $595 million in 2002 to $2.23 billion in 2006, with another major jump to $3.285 billion in 2007. Dividends paid grew from $139 million in 2002 to $6.664 billion in 2006 and then down to $4.379 billion in 2007. Cash and liquid assets were $2.587 billion at end-of-year 2007. The share price for TNK-BP Holding fell from a high of $3.40/share in early 2006 to $2.00/share in mid-2008.
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In 2008, TNK-BP accounted for about one-quarter of BPs total production, one-fth of its reserves, and about one-tenth of net income.
June 2003Russians Say the Expatriates Costs Are Too High: Victor Vekselberg commented on expatriate costs:
Bonuses and entitlement for expatriates has been one of the most hotly debated issues. Foreigners who come to Russia want to bring a piece of their own life here.8
May 2004The Russian Partners Want the Deal Changed: The Russian partners informed BP that they wanted the payments for their share of the JV to be made earlier. BP made the following statement:
We have an excellent set of agreements. We expect all partners to stick to those agreements. As we announced in February last year, BP, under the terms of the agreement, will pay three annual tranches on the anniversary of completion of dollars 1.25bn in BP shares valued at market prices prior to each annual payment. What our partners do with those agreements is a matter for them. The agreements provide for AAR to be 50 percent owners of TNK-BP through 2007.9
August 2004Yukos is Dismantled: The Russian government began the process that would see the bankruptcy and dismantling of oil company Yukos, and the jailing of its prominent and outspoken CEO, Mikhail Khodorkovsky. Yukos was charged with tax bills and other claims of about $28 billion. April 2005TNK-BP Faces a Huge Tax Bill: Russian tax authorities announced a $1 billion tax claim relating to 2001 earnings. Viktor Vekselberg said, We cannot possibly have such liabilities, and will therefore dispute themThere can be no risks, no parallels with Yukos.10 A few months later, the tax liability was reduced. Robert Dudley made the following comments:
The significance of this (tax claim) goes far beyond our company. Everyone will watch this as a test of whether Russia can integrate with the world economy. I dont think it is in the interest of the Russian government to destroy TNK-BP. Russia is inadvertently becoming increasingly difficult to navigate for well-intentioned investorsRussian and foreign alike. The state has progressively asserted its influence over the commanding heights of the economy, and state-owned companies have begun to play an increasingly prominent role. At the time when Russias economy is in need of knowledge and management skills, it is becoming increasingly difficult to bring in managers and executives.11
April 2005TNK-BP May Not Be Allowed to Bid for New Oil Fields: A senior ofcial in the Natural Resources Ministry said that that an auction for three major elds had been canceled in March in order to exclude TNK-BP. Later in the month, Vladimir Putin told John Browne, BP CEO, We were not mistaken when we supported your decision two years ago. The prots of the joint company have increased 20 times over. This is proof of the quality of management.12 October 2005Foreign Oil Companies Cannot Participate in Auctions: Russias natural resources minister announced that companies more than 50 percent foreign-owned will not be allowed to take part in 2006 auctions for new oil elds.
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March 2006TNK-BP in Major Dispute Over Gas Field: One of TNK-BPs most valuable assets was the Kovykta gas eld in eastern Siberia. The license to develop Kovykta was held by Rusia Petroleum, 62.89 percent owned by TNK-BP, and previously controlled by Sidanco. TNK-BP wanted to develop the gas for Asian markets, and Gazprom (the Russian government-owned natural gas company) said the gas should be developed for Russia. There was speculation that Rusia Petroleums license for the eld would be revoked. The Natural Resources Ministry accused TNK-BP of producing too little gas at the eld. TNK-BP argued it could not produce the 9 billion cubic meters per year stipulated in the license since Gazprom had blocked construction of a pipeline to China, and local demand was insufcient. TNK-BP had been lobbying for years for the license to be amended. October 2006Robert Dudley Says TNK-BP Will Survive:
We are confident there is a solid future for TNK-BP. Much has been written about the consolidation of the stateBut I believe having companies like this is a good thing for the industryAs long as we continue to get good results, I think the company will more than survive, I think it will thrive. I have seen no evidence that they [the Russian partners] are working to sell their interest.13
October 2006TNK-BP Engineer Killed: The chief engineer for Rusia Petroleum, which held the license to develop the Kovykta gas eld, was shot dead in Siberia. Rumors about a contract killing immediately began circulating. June 2007Putin Angry about the Kovykta Gas Field Dispute: In Germany for a G8 meeting, Putin said to reporters:
How long should we tolerate it if participants of that consortium do nothing to implement the license? This is not about BP, not about the foreign partner, but about all the shareholders that took the obligations to develop this field and, unfortunately, didnt meet the license termsI wont even talk now about how the license was purchased. Lets leave this up to the conscience of those who did it a while ago, also in the early 1990s.15
Late June 2007TNK-BP Sells Its Stake in the Kovykta Gas Field: TNK-BP sold its 62.89 percent stake in Rusia Petroleum, which holds Kovyktas development license, to Gazprom for about $800 million, less than a third of its real value, according to some analysts. TNK-BP had invested about $450 million in developing the eld. TNK-BP had the option to buy back 25 percent of the eld at market price. Gazprom Approaches BP about a Deal in 2007: In mid-2007, Gazprom initiated discussions with BP about a possible alliance. Gazproms goal of becoming a global oil and gas company was being stymied by opposition from Western governments. Gazprom was interested in stakes in BP assets outside Russia. In return, Gazprom would contribute large stakes in its Russian oil business. A key element of the alliance would involve Gazprom buying AARs TNK-BP stake, which would then allow BP and Gazprom to combine their various Russian oil assets and create the largest Russian oil producer.16 Gazprom ofcials told BP privately that they believed AAR would sell. AAR said publicly that they had no intention of selling. BPs country manager for Russia, James Dupree, handled most of the discussions with Gazprom. BP CEO Tony Hayward made several trips to Russia to meet with Gazprom CEO Alexei Miller. Based on the many meetings that were held, BP was condent that a deal would happen, and that the TNK-BP partner issues would be resolved.
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The attempt to portray this conflict as a dispute between a respectable Western company and some Russian oligarchs who are trying to take control using dirty methods is completely cynical. It is our partners who are using methods from the 1990s. There is a good English word: arrogance We sensed this condescending attitude towards what we were saying [for months]This is about the type of foreign investors Russia needs. We dont need foreign investors who limit the development of the company.20
Hayward refused to remove Dudley. The Russian shareholders threatened legal action to strip BP-appointed directors of their powers. BP was contemplating its own lawsuit against the partners to recover a portion of back taxes that were recently paid. BP maintained that the taxes paid for the period prior to the formation of the JV should be borne entirely by the previous owners of TNK (which would include Fridman, Vekselberg, and Blavatnik) and its subsidiaries, and not BP. BP Chairman Peter Sutherland expressed his frustration:
This is just a return to the corporate raiding activities that were prevalent in Russia in the 1990s. Prime minister has referred to these tactics as relics of the 1990s but, unfortunately, our partners continue to use them, and the leaders of the country seem unwilling or unable to step in and stop them. This is bad for us, bad for the company and, of course, very bad for Russia.21
BPs Options
In late July 2008, it was looking increasingly likely that Robert Dudley would not be granted a visa and would have to leave Russia. There was also concern that Russias Federal Labor and Employment Service would try to prosecute a group of TNK-BP managers for violating labor law. Because of the uncertainty, Dudley had not left Russia since March. The Russian partners maintained that his contract expired at the end of 2007, while BP said his contract was automatically renewed. In an interview, Dudley said:
Running the company now is like driving a car, and sometimes the brakes work and sometimes they dont. I spend a lot of time holding meetings out on the balcony of my office.Its not me personally, it cant be performance; its the role, the check and balance between the interests of the shareholders. Ive got an obligation to hold the line for both sets of shareholders.23
Without a Gazprom deal to buy out AAR, Robert Dudley and his BP colleagues considered their other options. One option was to take the dispute to the highest levels in the Russian government, perhaps even to Putin himself. The results of earlier meetings with Igor Sechin, Deputy Prime Minister, suggested that this option would have limited value. A second option was to seek British government help, which had been offered. Prime Minister Gordon Brown was going to be in Russia in July for meetings with President Medvedev. A third option was legal action against AAR for violating the shareholder agreement. Finally, BP could sit tight, continue to run the business, and resist the Russian shareholders. Meanwhile, the Russian shareholders continued to push for Dudleys dismissal, with Victor Vekselberg calling for a July board meeting to discuss Dudleys infringement of Russian employment, immigration, and tax laws. Although BP said Dudley would keep his job, it was hard too see how he could remain CEO if he was outside Russia.
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Notes
G. White, BP in RussiaPlagued From Start? Putin Says Venture Structured Poorly, Clear Boss Is Needed, Wall Street Journal, June 2, 2008, p. B2. 2 Ibid. 3 Trouble in the Pipeline: Russias Oil Industry, The Economist, May 10, 2008. 4 A. Jack, BP Amoco to Review its Russian Interests, Financial Times, Nov. 27, 1999, p. 15. 5 Ibid. 6 G. White, and G. Chazan, Boardroom Brawl Roils BPs Russia Venture, Talks Break Down; Kremlins Role Murky, Wall Street Journal, June 12, 2008, p. A1. 7 C. Hoyas, and A. Ostrovsky, Aiming to Clean Up in Russia with Record Deal: The Success of BPs Huge Project Will Not Only Be Judged in Oil and Money, Financial Times, June 26, 2003, p. 26 8 Ibid. 9 C. Hoyas, A. Jack, and A. Ostrovsky, Russian Partners Seek to Change BP Deal, Financial Times, May 4, 2004, p. 1. 10 I. Gorst, and A. Ostrovsky, TNK-BP Hit by a Dollars 1bn Tax Bill, Financial Times, April 12, 2005, p. 21. 11 I. Gorst, and A. Ostrovsky, TNK-BP Chief Attacks Russias Uncertain Investment Climate, Financial Times, April 13, 2005, p. 8. 12 C. Belton, Putin Allays TNK-BP Worries, Moscow Times, April 25, 2005. 13 C. Belton, Dudley Dismisses Talk of Sale, Moscow Times, October 4, 2006. 14 Ibid. 15 A. Medetsky, An Irritated President Steps into Kovykta Fray, Moscow Times, June 5, 2007. 16 G. White, and G. Chazin, Misreading the Kremlin Costs BP Control in Russia Venture, Wall Street Journal, December 16, 2008, pp. A1, A6. 17 G. White, and G. Chazan, BP Venture Is Threatened as Criticisms Spill into the Open, Wall Street Journal, May 28, 2008, p. xx. 18 G. White, and G. Chazan, Intrigue in Russia Ensnares BP Venture, Wall Street Journal, May 30, 2008, p. A1. 19 White and Chazan, Boardroom Brawl Roils BPs Russia Venture. 20 C. Belton, and E. Crooks, Fridman Accuses BP of Arrogance, Financial Times, June 17, 2008, p. 18. 21 R. Anderson, C. Belton, and E. Crooks, BP Accuses Russians of Corporate Raiding, Financial Times, June 13, 2008, p. 1. 22 G. White, and G. Chazan, BP Is in the Dark in Struggle to Save Its Russian Venture, Wall Street Journal, June 30, 2008, p. B4. 23 G. White, The Bitter Battle to Lead TNK-BP: Dudley Pushes Back as Russian Group Seeks His Ouster, Wall Street Journal, July 23, 2008, p. B1.
1
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(273) 133 2,071 (190) (337) $1,544 16.8% 15,448 $0.10 $0.01 9.0%
(177) 189 2,815 (227) (214) $2,374 19.6% 15,448 $0.15 $0.04 25.0%
(29) 4,674 (1,221) (37) $3,416 19.9% 15,448 $0.22 $0.25 112.8%
(111) 766 6,975 (1,220) (70) $5,685 18.9% 15,448 $0.37 $0.25 68.6%
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Company
Gazprom LUKOIL Gazprom Neft Surgutneftegas Tatneft TNK-BP Transneft Rosneft NOVATEK Russias Average
1.86 2.31 3.56 0.90 1.20 5.80 1.41 1.50 2.11 2.29 1.35 1.45 1.69 0.28 1.19 1.59 1.60 2.26 1.59 1.19 1.65 1.98 2.24 1.12 3.33 2.54 2.25 2.24
PetroChina China Petroleo Brasileiro SA Brazil Sasol RSA Sinopec China Emerging Markets Average
Murphy Oil USA Norsk Hydro Norway Occidental Petroleum USA Petro-Canada Canada Repsol YPF Spain Developed Markets Average
Source: Veles Capital, June 16, 2008, p. 17. Original data drawn from Bloomberg, Estimation, and Veles Capital.